The Global Decline of the Natural Rate of Interest and Implications for Monetary Policy. The natural rate of interest is a real short-term rate that occurs when the economy has reached maximum employment and has stable inflation (i.e., the interest rate that occurs when the economy is in equilibrium). Second, there is a downward trend in estimated natural rates of interest: Toward the end of our sample, the estimated natural rates of interest in all four economies have fallen to historically low levels. Holston, Laubach, and Williams estimate the natural rate of interest, trend growth, and the output gap for four economies—the United States, Canada, the United Kingdom, and the Euro Area—using a version of the Laubach-Williams model.